South Korea’s 2040 Coal Exit: What Australian Investors Need To Know
COP summits have a reputation. Thousands attend, leaders speak for hours, and everyone else queues for coffee while waiting for the final communiqué. It is easy to joke that these gatherings are talk fests. But occasionally, a decision is made that cuts through the noise. At COP30 in Brazil, South Korea delivered one of those rare announcements. The country will phase out coal power by 2040 and has joined the Powering Past Coal Alliance (PPCA), signalling a major shift in Asian energy markets and global trade flows. (1)
This is not a symbolic decision. South Korea is Asia’s fourth largest economy and one of the world’s biggest importers of thermal coal. Its policy direction matters for Australia, for the region and for investors who rely on understanding long-term structural trends rather than political theatre.
What South Korea Announced at COP30
According to AFP, South Korea will retire at least forty of its sixty one coal plants by 2040, with the remaining units to follow after economic and environmental review. The commitment applies to unabated coal, meaning generation without carbon capture or storage technologies. It is the country’s first formal pledge to stop building new coal plants and begin closing existing ones. The government framed the move as central to its clean energy transition and to meeting its 2050 carbon neutrality target.
An ABC report adds that South Korea's coal fleet currently supplies about one third of the country's electricity and contributes roughly sixty per cent of its power sector emissions. (2) Under the new commitment, all coal plants will be phased out by 2040. This is a significant acceleration from earlier timelines. The decision also aligns South Korea more closely with global efforts to limit temperature increases in line with the Paris Agreement.
The AFR article by Jessica Sier highlights the geopolitical significance. (3) South Korea becomes the first major coal burning nation in Asia to make such a commitment. The announcement at COP30 provided the platform to formalise the pledge and join the global Alliance working to eliminate coal power.
Why COP30 Mattered
Despite the scepticism and talk in the mass media about COP gatherings and whether Australia was right or wrong to let go of ambitions to host COP31, they do serve a purpose. They create deadlines. They create pressure. They create moments where governments announce decisions they may have delayed at home. For South Korea, COP30 provided the international framework to anchor its shift. It also placed its energy transition in front of investors who care about consistency, timelines and credibility. When a major economy makes a formal commitment on a global stage, it becomes harder to unwind and easier to model.
COP30 also came at a time when global attitudes toward emissions reductions have been uneven. Some advanced economies have slowed or reversed their commitments. Others, like South Korea, are choosing to accelerate. Investors watch these divergences carefully because capital follows clarity.
Implications for Australia
South Korea is Australia’s third largest thermal coal customer, taking around fifteen million tonnes a year. Even after recent declines in demand, the trade is still worth roughly $2.3Bn annually. The COP30 decision means that this demand will continue falling and is likely to diminish structurally over the next two decades. The ABC analysis notes that Australian Treasury modelling already expects the value of coal and gas exports to halve by 2030. South Korea’s move reinforces this view.
The AFR report is clear about the economic consequences. South Korea’s shift puts pressure on other Asian countries to accelerate their own transitions, and it amplifies the risk for exporters that rely on legacy fossil fuel energy markets. Countries that have traditionally depended on South Korean technology and finance to build coal infrastructure may find those avenues closing. Australia’s coal industry therefore faces both direct and indirect demand reductions.
It is also worth noting the Minerals Council of Australia’s stance. The Council argues that South Korea’s commitment applies only to unabated coal, leaving some room for continued exports if carbon capture technologies are deployed. However, these technologies face cost, scale and effectiveness questions. Investors should treat this as optionality, not as a baseline assumption.
What This Means for Investors
The investment implications are substantial.
First, thermal coal exposure carries accelerated transition risk. As major buyers like South Korea bring forward phase out timelines, the long-term economics of coal rely on fewer markets with shorter horizons. Investors holding assets tied to coal demand must assess whether current valuations adequately reflect this shift.
Second, capital will move to replacement technologies. South Korea’s transition requires expanded renewable energy capacity, more grid storage, increased nuclear utilisation and investment in transmission infrastructure. This supports global supply chains in solar, wind, batteries, critical minerals and green industrial manufacturing.
Third, the decision strengthens the case for Australia’s clean energy opportunity. As traditional export markets decline, Australia must build new export pillars. These include green hydrogen, critical minerals such as lithium and rare earths, renewable-powered industrial processes and nature based markets that align with global decarbonisation.
Fourth, this reinforces how global climate policy influences capital allocation. Investors reward stability. When a major economy locks in a twenty year transition pathway, it reduces uncertainty and attracts investment. Countries that delay or send mixed signals risk losing competitiveness in global capital markets.
The Bottom Line
South Korea’s decision to eliminate coal power by 2040 is a defining moment in Asia’s energy transition. For Australia, it confirms what the data has been signalling. Thermal coal demand is on a structural decline that no amount of political debate can reverse. For investors, the opportunity lies in positioning portfolios toward the growth sectors emerging from this shift. Whether or not COP30 was a talk fest, it delivered at least this commitment with real world impact. Markets will adjust accordingly.
References
AFP. “South Korea pledges to phase out coal plants.” Macau Business. https://www.macaubusiness.com/south-korea-pledges-to-phase-out-coal-plants/
Mercer, D. “South Korea coal plant closure warning on Australian exports.” ABC News. https://www.abc.net.au/news/2025-11-18/south-korea-coal-plant-closure-warning-on-australian-exports/106021660
Sier, J. “South Korea coal phase-out to hit Australian exporters.” Australian Financial Review. https://www.afr.com/world/asia/south-korea-coal-phase-out-to-hit-australian-exporters-20251118-p5ng9u
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